Financial authorities seek to conduct an organized and gradual exit of cryptocurrency mining. Cities like Ya’an and Garze still encourage Bitcoin mining in their territory.
The Chinese province of Sichuan, the world capital of Bitcoin mining, reportedly asked the local government to guide the mining operations to exit this business.
According to leaked online information, some companies are taking advantage of the excessive publicity about recent government policies. These rules allegedly give public support to the blockchain industry and Bitcoin mining, so the firms might be using them to seek investment in cryptocurrencies and illegal fundraising.
The news has spread widely, indicating that the main financial regulator of the province, the Sichuan Finance Office, has requested local governments to conduct an organized withdrawal of the support for Bitcoin mining.
The news was reportedly issued to all offices of the financial regulator to request that local governments implement mandatory measures on energy supply. In other words, the local agency wants regulations regarding the price of electricity, land use, tax returns, and environmental protection to ensure the gradual elimination of existing Bitcoin mining activities.
By mid-May, the news reached all the cities and counties within Sichuan, some of which issued the necessary documents and reported progress in their work. Last May 21st, the autonomous county Muli requested the country’s hydroelectric power generation companies to immediately stop attracting investors to cryptocurrency mining. Otherwise, they said that they would suggest that local law enforcement authorities adopt mandatory measures such as closing, finding, or ordering the dismantling of mining farms.
Changing Policies of Sichuan
At the beginning of May, multiple local governments in Sichuan, including Ya’an and Garze, have shown their support. They have also encouraged cryptocurrency mining operations to help consume excess hydroelectric power during the rainy season. In that way, they would recover from the economic losses due to the coronavirus outbreak.
Meanwhile, electricity consumption has increased due to prolonged high temperatures and delayed rains within the region. This has resulted in the limitation of electricity-demanding Bitcoin mining activities in some areas.
After the changing policies, the latest news of strict measures from the province’s financial regulators caused yet another stir. However, Bitcoin miners seem not to be disturbed. They say that the authorities are taking a strict stance again. This is because some companies are conducting exaggerated advertising to attract investors’ attention.
Of course, there are no guarantees that the order of the local authorities will work. Local energy providers could continue to feed Bitcoin’s mining businesses under the table to get a slice from profitable activities.
It is difficult for the parties involved to fully implement the orders. Given that Bitcoin’s mining operations usually run under the name of big data or cloud computing, it is difficult for low-level administrations to distinguish them from other high-tech supported businesses. Most of these would not mind turning a blind eye to Bitcoin mining activities within the region since these operations could bring economic benefits to locals.
By Alexander Salazar